NEWPORT BEACH, Calif. (AP) -- Mindspeed Technologies Inc., a California-based maker of chips for telecommunications gear, on Thursday said it had agreed to buy Picochip Ltd. of Britain, a maker of chips for so-called "femtocells" — small devices that mimic a cell tower.
Mindspeed agreed to pay $51.8 million, plus up to $25 million based on Picochip's performance. It's paying $27.5 million of the initial sum in cash and issuing 5.19 million shares.
Picochip and Mindspeed are both leading makers of chips for femtocells, but the market has been slow to take off. Phone companies have deployed femtocells in small numbers to customers who have poor reception in their homes, but wider use is hampered by interference with cell towers.
However, femtocell chips could also find a use in "small cells," scattered cellular antennas that can complement cell towers to improve coverage and network capacity.
Picochip is privately held and based in Bath.
Newport Beach-based Mindspeed also said Thursday that it now expects revenue in the fiscal first quarter, which ended Dec. 30, to be around $33.3 million. That's down from a previous forecast of $35.9 million to $37.5 million and below the average Street estimate of $36.3 million, according to a survey by FactSet. It said gross margins would be weaker as well. CEO Raouf Halim said demand now appears to be stabilizing.
Mindspeed shares rose 46 cents, or 9.8 percent, to $5.14 in afternoon trading.
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